European Cooperative (Societas Cooperativa Europaea)

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by Thomas von Hippel

1. Definition and history

The European Cooperative (Societas Cooperativa Europaea (SCE)) is a supranational private company under European law having legal personality which is formed mainly to promote the interests of its members. The minimum start-up capital is set at €30,000. Entities formed as a European Cooperative carry the notation ‘SCE’.

There are two other European supranational legal forms: the European Economic Interest Grouping (EEIG) which was introduced in 1985 (a legal form that has not proven of particular significance in practice), and the European Company (Societas Europaea, SE) which was introduced in 2001. Additionally, there are plans to introduce a European Private Company (Societas Europaea Privata).

In the 1960s the first proposals for the SCE were developed. In the 1990s the European Commission presented their proposal for an SCE Regulation, combined with a directive on co-determination. For both the SCE and the SE, the Commission needed more time to cope with the problem of co-determination. However, shortly after the introduction of the SE in 2001, the SCE was also introduced. The SCE Regulation mainly follows the model of the SE Regulation.

2. Applicable law

As in the case of the SE, the SCE Regulation provides only basic rules for the SCE which are necessarily supplemented by the national rules of every Member State in both associated or related legal fields (eg labour law, tax law) and naturally in the area of company law. Thus, like the SE, the SCE is not a ‘European’ legal form in the pure sense. In practice, 27 different SCEs exist, each of which melds the national company law of the respective Member State with the Regulation for the SCE (eg the ‘French SCE’, the ‘German SCE’ and the ‘Italian SCE’).

According to Art 8 of the SCE Regulation, an SCE is in the first instance governed by the SCE Regulation itself, which as directly applicable secondary Union law (Art 288(2) TFEU/249(2) EC) takes priority over Member State national law—albeit in the incomprehensive manner noted above.

Secondly, an SCE shall be governed by the provisions of the SCE’s statutes, where expressly authorized by the SCE Regulation.

As far as matters which are not fully regulated or those only partly regulated by the SCE Regulation, the SCE shall be governed by: (i) the laws adopted by Member States in the implementation of Union measures relating specifically to SCEs; (ii) the laws of Member States which would apply to a cooperative formed in accordance with the law of the Member State in which the SCE has its registered office; and (iii) the provisions of its statutes, in the same way as for a cooperative formed in accordance with the law of the Member State in which the SCE has its registered office.

As in the case of the SE, there exists a principle of non-discrimination (discrimination (general)) according to which an SCE shall be treated in every Member State as if it was a cooperative formed in accordance with the law of the Member State in which it has its registered office (Art 9 SCE Regulation).

3. Formation

The SCE can only be formed in one of the following ways (numerus clausus; Art 2(1) SCE Regulation).

A start-up of an SCE can be accomplished by a minimum of five natural persons or companies of the Member States (as defined in Art 54(2) TFEU/48(2) EC, companies or firms constituted under civil or commercial law, including cooperative societies, and other legal persons governed by public or private law, save for those which are non-profit in nature) where these persons or companies are resident in at least two Member States.

The formation of an SCE by merger is possible between cooperatives formed under the law of a Member State with registered offices and head offices within the Union, provided that at least two of them are governed by the laws of different Member States.

The formation of an SCE by conversion is possible where the cooperative to be converted was formed under the law of one Member State, has its registered office and head office within the Union and has had an establishment or subsidiary governed by the law of another Member State for at least two years.

It should be noted that in all instances some cross-border element is necessary, a requirement which has increasingly come under criticism from a policy perspective.

As regards the formation procedure, an SCE shall acquire legal personality on the day of its registration (Art 18(1) SCE Regulation). As regards the rules of formation, the national law of the Member States is generally applicable (Art 17(1) SCE Regulation). The requirements for formation also include consideration of the rules in respect of co-determination (Art 11(2) and (3) SCE Regulation) and, in the case of Germany, the joining of an auditing association (Prüfungsverband) (see Art 5(3), 71 SCE Regulation and § 11(3) no 3 GenG).

4. Purpose

According to Art 1(3) SCE Regulation, the principal object of an SCE is the satisfaction of its members’ needs and/or the development of their economic and social activities, in particular through the conclusion of agreements with them to supply goods or services or to execute work of the kind that the SCE carries out or commissions. The SCE distinguishes itself from stock corporations through its focus on the economic furtherance of its members. By contrast, stock corporations earn profit on their capital.

5. Governance

In terms of its governance, every SCE must conduct a general meeting. Apart from this, the founders of an SCE are free to introduce into the charter either a two-tier board system or a one-tier board system (Art 36 SCE Regulation).

An SCE has to hold a general meeting at least once each calendar year, within six months of the end of its financial year, unless the law of the Member State in which the SCE’s registered office is situated (ie the law applicable to cooperatives carrying out the same type of activity as the SCE) provides for more frequent meetings. A Member State may, however, provide that the first general meeting may be held at any time in the 18 months following an SCE’s incorporation (Art 54(1) SCE Regulation). Members of the SCE, who together number more than 5,000, or who control at least 10 per cent of the total number of votes, may require the SCE to convene a general meeting and may draw up its agenda. The above proportions may be reduced by the statutes (Art 55 SCE Regulation). As a general rule, every member of an SCE shall have one vote, regardless of the number of shares he holds (Art 59 SCE Regulation); deviations are allowed on a limited basis where consistent with the law of the state in which the SCE has its registered office.

Where there is a two-tier board system (Arts 37–41 SCE Regulation), the management organ is responsible for managing the SCE and represents it in dealings with third parties and in legal proceedings (Art 37(1)1 SCE Regulation). The member or members of the management organ shall generally be appointed and removed by the supervisory organ (Art 37(2) SCE Regulation). The supervisory organ, whose members are generally appointed by the general meeting, shall supervise the duties performed by the management organ (Art 39 SCE Regulation). In order to fulfil this task the supervisory organ has specific information rights (Art 40 SCE Regulation).

Where a one-tier board system is operating (Arts 42–44 SCE Regulation), an administrative organ shall manage the SCE and shall represent it in dealings with third parties and in legal proceedings (Art 42(1)(1) SCE Regulation). The members of the administrative organ are as a rule appointed by the general meeting (Art 42(3) SCE Regulation). A Member State may provide that a managing director shall be responsible for the current management under the same conditions as applicable for cooperatives that have registered offices within that Member State’s territory (Art 42(1)(2) SCE Regulation). The administrative organ shall meet at least once every three months and each member of the administrative organ shall be entitled to examine all reports, documents and information submitted to it (Art 43 SCE Regulation).

Generally, both in the two-tier board system and in the one-tier board system, members of SCE organs shall be appointed for a period laid down in the statutes not exceeding six years (Art 45 SCE Regulation). Re-appointment is permitted. An SCE’s statutes may list the categories of transactions requiring authorization from another SCE organ (Art 48(1) SCE Regulation).

6. Co-determination

As regards co-determination, the rules of the European Company (SE) are applicable also for the SCE. It is left to the employees and employers of the SCE to reach an agreement regarding co-determination. However, there are certain mandatory procedural rules in order to guarantee a fair outcome. As a rule it is necessary to establish a special committee which includes representatives of the employees and representatives of the employers. This committee negotiates with the representative organs of the legal persons which aim to either form an SCE or merge into an SCE. In order to reach an agreement, a certain quorum is necessary which depends on the specific situation and which should guarantee adequate participation of the employees. If the negotiations fail, it is for the Member States to determine an applicable default co-determination model.

Exceptions to these rules on co-determination exist only for SCEs established exclusively by natural persons or by a single legal entity and natural persons employing either less than 50 employees total or 50 or more employees in only one Member State. Here, the SCE is subject to the rules of the Member State where it has its registered office while its subsidiaries or establishments are subject to the provisions of the Member State where they are situated (cf Dir 2003/72).

7. Auditing association

For German SCEs, the special rule in Art 71 SCE Regulation is applicable, which forces a German SCE to become a member of an auditing association (as is required for a German national cooperative). Article 71 SCE is a kind of lex Germanica because the other Member States have no comparable duty for national cooperatives.


Thomas Fischer, Die Europäische Genossenschaft (1995); Reiner Schulze, Handbuch der Europäischen Genossenschaft (SCE) (2004); Reiner Schulze, ‘Die Europäische Genossenschaft’ [2004] Neue Zeitschrift für Gesellschaftsrecht 792; Stefan Grundmann, Europäisches Gesellschaftsrecht (2004—published in English as European Company Law with Florian Möslein in 2007); Mathias Habersack, Europäisches Gesellschaftsrecht (3rd edn, 2006); Matthias Heinrich Wiese, Die europäische Genossenschaft im Vergleich zur eingetragenen Genossenschaft deutschen Rechts (3rd edn, 2006).

Retrieved from European Cooperative (Societas Cooperativa Europaea) – Max-EuP 2012 on 25 June 2024.

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